So there are even more changes coming for lenders and borrowers.  One that will help make borrowing easier.  FHA loans, which are an entry level loan for MANY borrowers, is about to change how it does business.  For starters, they will be changing their limit on how much they can lend to be equal to the ‘Conventional Conforming’ limit.  For Maricopa County Arizona, that limit is $417,000.  As you can imagine, this gives FHA borrowers much more buying power.  Typically, borrowers were limited to around the $250,000 range.  Also, they are reducing the required minimum down payment to 1.5% down from 3%.  This makes the hard topic of down payments slightly more within reach.  For a $200,000 home, the down payment changes from $6000 to $3000.  Down payment gifts will still be allowed.  FHA makes it much easier in that it is not driven as much by a borrower’s credit score.  Hopefully, soon these will take affect after our Congress is done with fine tuning them!

All in all, there have been many changes that have made loans much harder to get.  Hopefully these types of changes will offset some of the difficulties.  Stay tuned for more developments…..   

Great news for distressed homeowners.  On December 20th, President Bush signed into law the “Mortgage Forgiveness Debt Relief Act of 2007″.  Under this new law, distressed homeowners who are selling their homes at less than the amount owed, will no longer be liable to the IRS for taxes owed on the “forgiven” amount of the debt.  This relief provides a permanent exclusion for up to $2 million of indebtedness on or after January 1, 2007.  This debt relief applies to primary residences only.  To read the entire act signed into law, please click on the following link:  Mortgage Forgiveness Debt Relief.

To further explain,  up until the 20th of December, if a homeowner sold his home for less than the amount owed, the forgiven amount of the debt was counted as income.  The bank would send the homeowner a 1099 at tax time the following year.  The homeowner would then be required to pay taxes on the forgiven amount of the debt plus any fees that the bank incurred.

This law put unnecessary hardship on the homeowner who was already having a difficult time meeting his/her obligations.  The new law now clears the way for homeowners to be able to sell their homes, relieving themselves of the obligation, without having to worry about the taxes they would incur.

This is actually great news for everyone!  With that obstacle removed, the homeowners win, bargain hunters win, and the banks win.

1.) Homeowners win because, as previously stated, they can work with the bank to sell their homes without fear of a huge tax liability.

2.) Bargain Hunters win because there may be more houses to choose from now that the tax obstacle has been removed.   It may be that more distressed homeowners may be willing to try and sell their properties rather than have the bank take them back.

3.) The banks win because they won’t have to go through with a foreclosure and end up with houses they now have to work to sell costing them more time and money.

4.) And Real Estate agents win, because we can help.  We will work with the bank, make the necessary calls, and work to get the house sold making one less worry for the homeowner.

WE NEEDED THIS!